Searching for Alpha: Ajna Finance

Lending protocols collectively comprise one of DeFi’s largest industries with $15B of TVL and billions of dollars in outstanding loans. While it has seen significant growth in the last several years, the current state of on-chain lending also presents many tradeoffs, and the space has generally made incremental advances since the launch of Compound Finance in 2018. 

Early lending protocols (e.g. ETHLend, Nuo Network) aimed to facilitate marketplaces for peer-to-peer loans but struggled to attract capital and users largely due to the fragmentation of liquidity and friction of bespoke loan agreements. The rise of automated money market protocols like Compound and subsequently Aave drove a significant expansion in on-chain lending activity and capital inflows.